Scenarios for termination without pay didn't align with narrow legislative limit
An Ontario court has struck down a hospital worker’s termination clause due to a for-cause provision that was too broad for the legislative limits requiring no termination pay.
Lorna Campbell-Givons, 61, was employed as a senior labour relations specialist with Humber River Hospital in Toronto. She was hired in January 2019 and her responsibilities included building and maintaining a relationship with the hospital’s unions as well as representing management at arbitrations and in collective bargaining.
Campbell-Givons signed an employment agreement with a termination clause that contemplated both for-cause and without-cause termination. The for-cause part listed nine scenarios as examples of circumstances in which the hospital would not provide termination and severance pay. The clause also stated, after the for-caus and without-cause sections, that “at all times the employee will receive all employment standards entitlements owed to her in accordance with the Ontario Employment Standards Act, 2000 (ESA).”
On Aug. 20, 2020, 19 months after Campbell-Givons started her job, the hospital terminated her employment without cause. It paid her three weeks’ pay in lieu of notice, three weeks of benefit continuation, and vacation pay accrued over the notice period. It indicated that these were the amounts to which she was entitled under the employment agreement’s severance clause.
Campbell-Givons sued for damages for wrongful dismissal. She argued that the termination clause was unenforceable and she was entitled to common-law notice as well.
For-cause scenarios violated employment standards regulation
Campbell-Givons claimed that the termination clause breached employment standards and therefore was invalid. She pointed to the for-cause portion of the clause and alleged that at least four of the nine scenarios for which the hospital wouldn’t provide termination and severance pay were not in accordance with employment standards legislation. A regulation under the ESA set out the circumstances in which no termination pay could be provided — “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” The four scenarios in question didn’t meet this standard, meaning that the termination with cause section of the termination clause violated the ESA, she argued.
The four scenarios highlighted by Campbell-Givons were:
- “Demonstrated incompetence”
- “Any material breach”
- “Any conduct which in the reasonable opinion of the president and CEO of the hospital… tends to bring… disrepute”
- “Any other act or omission which would amount to cause.”
The hospital countered that the termination clause did not violate the ESA, as the statement at the end of the clause guaranteed that Campbell-Givons would “always and inevitably receive her ESA entitlements.” It characterized that statement as “clarifying language” that ensured the ESA would not be violated, adding that Campbell-Givons actually received an extra week of termination pay over and above what the ESA required.
Employers must be encouraged to draft termination clauses in accordance with legislation, the court said.
The court noted that the exemption from paying the legislative minimum termination pay is narrower than that of the common law standard for just cause.
“There is a wide range of conduct that may disentitle an employee from reasonable notice under common law, but which would not be sufficient to deprive the employee of their minimum termination entitlements purusuant to the ESA,” said the court.
Termination clause can’t be saved
The court also pointed out that the Ontario Court of Appeal, in its 2020 decision of Waksdale v. Swegon North America Inc., established that employers could not cut illegal provisions in a for-cause portion of a termination clause in order to uphold the overall clause, which would be “cherry-picking and relying on otherwise legal language.” The appeal court stated the employment agreements must be interpreted as a whole and not on a piecemeal basis.
The court found that the four scenarios highlighted by Campbell-Givons did in fact violate the ESA. While the hospital setting may involve heightened sensitivity when it came to patient privacy and safety, the outlined scenarios would likely be viewed similarly in other workplaces and a material breach of an employment agreement would be as impactful in many other settings, the court said, adding that there was no evidence of heightened importance and sensitivity in the hospital setting.
The court also found that the “clarifying language” to which the hospital referred was in fact “saving language,” which has been frowned upon in previous court decisions. Saving language can’t be used as a way to save a termination clause that otherwise violates employment standards because it wouldn’t encourage employers to draft agreements that comply with the ESA in the first place, said the court. Because of this and the power imbalance in the employment relationship, any ambiguity in a termination clause must be interpreted to give the greater benefit to the employee to avoid the risk that an employer might “slip in” a provision known to be broader than the ESA regulation’s narrow for-cause restriction without the employee’s knowledge, the court added.
“Whether as ‘saving’ or ‘clarifying,’ I do not accept that the ‘at all times’ language, coupled as it is with provisions breaching the ESA, renders those offending provisions acceptable,” said the court.
The court determined that the termination clause was unenforceable. Based on Campbell-Givons’ age, seniority, and responsibility of her position, it found the appropriate notice period to be 4.5 months.
For more information, see:
- Campbell-Givons v. Humber River Hospital, 2021 ONSC 6317 (Ont. S.C.J.).
- Waksdale v. Swegon North America Inc., 2020 ONCA 391 (Ont. C.A.).
